Federal Direct Exit Loan Counseling
Student Financial Services
Fall 2012
What is Exit Counseling and
Why are You Here?
 Exit counseling is a way for students to
understand their rights and responsibilities.
 Must be completed if you withdraw, graduate, or
drop below half-time attendance.
 Understand the agreement you entered when
you borrowed your loans.
Objectives for Today
 Review Federal Direct Student Loans
 How many loans do I have and where are they?
 Repayment Plans
 What if I don’t pay? Consequences of default
 When and how to get help from your
servicers/lenders
 Be successful and repay your loans.
Review Federal Student Loan
Programs
Federal Student Loan Programs
 William D. Ford Direct Loan (Direct Loan) Program Loans:
< Direct Subsidized Loans
< Direct Unsubsidized Loans
< Direct Graduate PLUS Loans (for graduate/professional
students)
 Federal Family Education Loan Program (FFEL) Loans:
< Subsidized Federal Stafford Loans
< Unsubsidized Federal Stafford Loans
< Federal Graduate PLUS Loans (for graduate/professional students)
Loan Definitions
 Loan:
The money borrowed from a lending institution or the
Department that must be paid back.
 Grace Period:
The six-month grace period after you graduate, leave
school, or drop below half-time enrollment in which you
are not required to make payments towards your loans.
Have you used your grace period?
 Lender:
The organization that made the loan initially for you
which could be a bank, credit union, or the Department
of Education.
Loan Definitions, Continued
 Loan Holder:
This is the institution that holds your loan and promissory
note and has the right to collect money from you.
 Loan Servicer:
The company that maintains the loan for the lender. This
organization will send bills, interest statements,
disclosure statements, and any other necessary
paperwork.
 National Student Loan Data System (NSLDS):
The Department of Education’s central location that
contains information about your federal student loans.
Loan Definitions, Continued
 Deferment:
A deferment is a period of time during which your lender
will temporarily suspend your regular payments.
 Forbearance:
If you are unable to make your scheduled payments, but
do not meet the criteria to qualify for a deferment, the
lender/loan holder may allow you to reduce the amount
of your payment.
 Collection Agency:
Company that will make all attempts and/or litigation to
recover defaulted student loans.
Loan Definitions, Continued
 Master Promissory Note (MPN):
MPN is the legal contract between you and the lender
(Department of Education)
Your promise to repay the loans even if you do not
complete your education or are otherwise unhappy with
the education you have received.
Effective for loans from multiple years
Changing Relationships
 To this point most of your contact regarding your
Federal Student Loans has been with MSU (or a
previous school).
 Now most of your questions will be directed to
the lender or loan servicer.
Subsidized Vs. Unsubsidized
 Subsidized
< Need-Based
< No interest is
accruing while you
are in school
 Unsubsidized
< Non Need-Based
< Interest begins accruing
the day the loan is
disbursed. The interest can
be paid while you are going
to school or capitalized
NOTE: Payment of principle for Subsidized and Unsubsidized
begins six months after you have either graduated, dropped
below half time, or withdrew.
Different Loan = Different Terms
*Standard Repayment Plan. Other repayment plans are available.
My Loans
 Check out the National Student Loan Data
System for students (NSLDS)
< www.nslds.ed.gov
 Check your loan records
 Check with your lender
 Check with the financial aid office
 Watch letters/emails from Loan Servicer, etc.
 Check your credit report
< www.annualcreditreport.com
National Student Loan Data
System (NSLDS)
 www.nslds.ed.gov
< Need your Federal
PIN number
< If you do not have
your Federal PIN, it
can be obtained at
www.pin.ed.gov
Repayment Plans
Paying on Your Loan
 You have the option to prepay all or part of your
federal student loans before your repayment
begins (without penalty).
 Make payments before they are due or pay a little
more each month.
 Contact loan servicer to make sure extra
payment is applied to principal balance.
 Paying extra each month can reduce total cost of
loan over time.
Standard Repayment
 Equal monthly payments
 Payment term of 10 years
 Minimum payment of at least $50 per month
•1An unsubsidized Stafford loan at 6.8% interest, with a 10-year amortized repayment plan
Other Repayment Options
 Graduated Repayment Plan
 Extended Repayment Plan
 Income-Based Repayment Plan
 Income-Sensitive Repayment Plan
 Income Contingent Repayment Plan
Graduated Repayment Plan
 Payments start out low and then will increase
every two years
 Payment term of 10 years
Loan
Amount
Beginning
Monthly
Payment
$10,000
$56.67
Ending
Monthly
Payment1
$159.63
Total
Interest
Paid
$4,726.70
Total Paid2
(Loan +
Interest)
$14,726.70
$30,000
$478.88
$14,179.62
$44,179.62
$170.00
•1 Payment amounts under graduated plans vary from lender to lender. Your lender will determine the
exact payments if you choose this plan.
•2 An unsubsidized Stafford loan at 6.8% interest, with a 10-year amortized repayment plan.
Extended Repayment Plan
 Eligible if you received loans after 10/7/1998 and
have over $30,000 in federal student loan debt.
 Repayment term may be as long as 25 years
 Minimum payment is at least $50 per month
 Monthly payments may be fixed or graduated
•1 An unsubsidized Stafford loan at 6.8% interest, with a 25-year amortized repayment plan.
Income- Based Repayment Plan
 Monthly payment is capped at an amount that is
affordable based on your income and family size
 Must reapply each year
 Payment term is 10-25 years
 May qualify for cancellation for any outstanding
balance on loans after 25 years
Income-Sensitive Repayment Plan
 Repayment option available only to borrowers
who have FFELP loans
 Monthly payments are based on income and total
loan amount
 Repayment term is 10 years
 Must reapply each year
Income-Contingent Repayment Plan
 Repayment option available only to borrowers
who have Federal Direct Loans
 Monthly payments are based on income and
family size
 Repayment term is 25 years
 Must reapply each year for this repayment plan
 Unpaid portion may be discharged with possible
tax liability
Loan Consolidation
 One lender and one monthly payment
 Flexible repayment options
 Reduced monthly payments
 Fixed interest rate
 Subsidized, Unsubsidized, Graduate PLUS, and
Perkins Loans are eligible for consolidation
 Check with Lender for Private student loans
Loan Forgiveness Opportunities
 Public Service Loan Forgiveness
< Borrowers who hold a public service job may be
eligible to have a portion of their Direct Loan debt
forgiven after making 120 payments.
< Visit the following website for more information
http://studentaid.ed.gov/repay-loans/forgivenesscancellation/charts/public-service
 Teacher Loan Forgiveness
< Borrowers who teach in an elementary or secondary
school that is classified as low income might be
eligible to have a portion of their student loan debt
forgiven
Loan Servicers
 Federal Loan Servicing (PHEAA)
 Great Lakes Educational Loan Services Inc.
 Nelnet
 Sallie Mae
 Department of Ed Student Loan Servicing (ACS)
Note: For a complete list of loan servicers, refer to the
list that was sent to you in the mail by Student Financial
Services.
What will my payments be?
 Payments on Federal Direct Loans will be based
on your actual Direct Loan debt level
 The minimum payment on your Federal Direct
Loan will depend on payment plan
What will my payments be?
 Repayment charts were included with your Exit
mailing.
 Loan history at MSU and other MnSCU schools is
included.
 Use a loan calculator to estimate what your loan
payment will be by going to
http://www.finaid.org/calculators.
Loan Repayment Examples
Money-Saving Tips
 Sign up to make your monthly payment via
automatic debit (ACH) instead of by check
 Pay on time
Tax Benefits for Education
 A tax credit reduced the amount of income tax you may
have to pay.
< American Opportunity Credit
< Hope Tax Credit
< Lifetime learning Tax Credit
 A deduction reduces the amount of your income that is
subject to tax which then reduces the amount of tax you
would have to pay.
< College Tuition & Fees Deduction
< Student Loan Interest Deduction
What If I don’t Pay?
The Consequences of Default
Consequences of Default
 Ineligible for future financial aid
 Difficulty in obtaining credit
 Seizure of tax refunds, wages and/or property
 Collection agency or other legal action
 Loss of deferment or monthly payment options
 Your entire loan balance will be due in full
immediately
 You may not be able to obtain a professional
licensure or get hired by an employer who
performs credit checks
Debt Management
Budget (monthly)
Total Monthly Income
Rent
Student Loans
$2100
$700
$220
Electric
$60
Heat
$100
Cable/Phone/Internet
$120
Food
$500
Entertainment
$150
Credit Card Payment
$100
Transportation (car
payment, gas, insurance)
$400
Savings
$50
Total:
-$300
Your Educational
Loan Payments
should be
considered fixed
expense like rent
and food!
When and How to Get Help!
Contact your Lender/Servicer
 Experience repayment difficulty
 Need a deferment or forbearance
 Change employer or employer address
Your Lender/Servicer Will Want to
Help
 If you are experiencing repayment difficulties
there are things your Lender or Servicer can do
to help you out.
<
<
<
<
Deferment
Forbearance
Change your repayment plan
Loan cancellation
Veteran’s Options
 Recent legislative changes have created new
options for Veterans.
 Contact your lender or servicer to find out more
information on these options that may be
available to you as a Veteran.
Be Successful and Repay Your Loans
Resolving a Dispute or Problem
 Contact your lender or servicer first
 If unable to resolve with your loan holder,
contact the Federal Student Aid (FSA)
Ombudsman for assistance.
 Phone number: (877) 557-2575
 Studentaid.gov under “Repay Your Loans”
Borrower’s Rights and
Responsibilities
Borrower Rights
 Loan obligation information
 Copy of Promissory Note
 Original Paid-in-Full Notice
 Interest rates/fees
 Loan balance
 Repayment schedule
 Notification of Loan Servicer
Borrower Rights
 Interest benefits
 Grace period
 Pre-payment without penalty
 Deferment while in school
 Request forbearance or deferment
Borrower Responsibilities
 Complete Exit Loan Counseling at
www.studentloans.gov
 Repay loans even if you
< Do not complete your education
< Are unhappy with the education you have received
< Can’t find employment
Borrower Responsibilities
 Maintain contact with your lender/servicer
< Notify your lender/servicer any time you change your
address
< Anytime you change your phone number
< Change your name
< Cannot make a payment
 Make monthly loan payments when the grace
period has ended
 Notify your lender/servicer of anything that might
change your eligibility for an existing
forbearance or deferment.
Personal Data
 Information about your loans are given to the
major credit reporting agencies.
 To avoid telemarketing and mass mailings based
on that information consider registering with the
National do not call registry at
< 1-888-382-1222 (TTY 1-866-290-4236) or
< https://www.donotcall.gov
Final Words
Your student loan debt is an investment in your future that no
one can take away from you.
“If a man empties his purse
into his head, no man can
take it away from him.
An investment in
knowledge always
pays the best interest.”
Benjamin Franklin
Questions?